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Government launches expenditure review in bid to seek out savings

The Presidency's policy unit head Joel Netshitenzhe speaks on government's expenditure review. (14/7/2009) Cameraperson: Nicholas Boyd. Editing: Darlene Creamer.

16th July 2009

By: Terence Creamer
Creamer Media Editor


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The South African government would undertake a "comprehensive review" of its expenditure in a bid to identify savings and reprioritise spending in light of falling revenues and rising expenditure, The Presidency's policy unit head Joel Netshitenzhe reported on Tuesday.

However, speaking at the release of the Medium Term Strategy Framework (MTSF), Netshitenzhe stressed that government had not yet identified the precise areas from where these savings could be drawn.


Government also remained committed to steadily increasing public expenditure over the next two to three years, and would fund the shortfall that would arise through increased borrowings. That said, the MTSF warned of "tough choices" and "serious trade-offs", as well as a slowdown in the pace of public spending.

Finance Minister Pravin Gordhan reported recently that the country was about R19-billion below its benchmark target for revenue collection and that this under recovery could swell to as much as R60-billion by the end of the year."


The MTSF, which is a central guide to resource allocation, warned that, apart from the cost-cutting exercises government would also, over the medium term, take actions to "reverse the large budget deficits" that were likely to arise.

A fiscal deficit of between 4% and 6% of gross domestic product (GDP) was currently being forecast, which was a marked departure from the average fiscal surplus of 0,4% of GDP recorded over the past three years.

Netshitenzhe promised a comprehensive process, which would include the identification of short-term cuts through discussions with government departments, as well as the creation of longer-term savings programmes.

The longer-term plan would arise only once a thorough expenditure review, across government, had been finalised. Netshitenzhe expected this review to take about a year to complete.

"This is work that is being done jointly by The Presidency and the National Treasury and we hope, especially with regard to the short-term issues, that we would have identified some of these areas ahead of the Medium Term Budget Policy Statement (MTBPS)," he added. The MTBPS would be published in either September or October.

In providing a flavour for the kinds of cuts anticipated, Minister in the Presidency responsible for Planning Trevor Manuel indicated that government would be reviewing advertising spend.

"It will mean that there are far fewer ads with pretty faces of politicians around," Manuel quipped.



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